Apple, Google may have to lead capex recovery: S&P

Tech companies like Apple and Google may have to take the lead in capital expenditure spending as traditional leaders like energy and materials companies have cut back.

A bounce back in corporate capex spending is seen as a necessary part of the economic recovery but a recent survey from Standard & Poor\’s suggests that increased spending appears some way off.

Much of that has to do with some of the biggest spenders in global capex, the energy and mining sectors. Energy companies make up nine out of ten of the top capex spenders and the top 2000 capex spenders are currently sitting on about $4.5 trillion in cash. S&P writes:

Of greater concern for global capex growth prospects is growing evidence of stalling capital expenditure in the much larger global oil and gas sector from the likes of Petrobras, Chevron
, Gazprom and Total. A decade-long boom that has seen spending more than double in real terms is running out of headroom, with capex now exceeding operating cash flow. This comes at a time when finding and extracting new reserves is getting harder and returns on capital are under pressure.

With energy and materials capex under pressure, other sectors need to lead if we are to see capex recover. There is some good news here. Excluding energy and materials, capex is expected to grow by 2.6% in 2014, led by IT (Apple
, Google
, Microsoft
), healthcare, and telecoms (Vodafone
, America Movil
). However, heavyweight capex sectors like utilities and industrials continue to reduce spending.

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